As long as the code is readable, it seems to me that the amount of indentation is largely a matter of personal preference.

Sure, as long as you're not trying to work with other people. And you have to work with other people! If you're on a project with several folks, there has to be some agreeable standard or things get messy. If you want to send in patches to an author you have to conform to their indentation style (or lack there-of).

The real fun comes in that after you've been using K&R one-tab indentation for long enough, other formatting becomes much less readable. When I'm debugging other people's code I find it's faster for me to reformat the code and then debug it. 90% of the time reformatting makes the bugs stand out like fire flies in a cave.

Using tab indentation and letting people choose the size of their tab stop helps people share code while maintaining some personal freedom of how to look at things.